Lions Gate Entertainment Corp. (USA) (NYSE:LGF) was in 15 hedge funds' portfolio at the end of December. LGF investors should be aware of a decrease in hedge fund interest lately. There were 18 hedge funds in our database with LGF positions at the end of the previous quarter.
In the financial world, there are tons of methods shareholders can use to analyze stocks. A couple of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the broader indices by a significant amount (see just how much).
Just as key, optimistic insider trading sentiment is another way to break down the stock market universe. As the old adage goes: there are a number of stimuli for an executive to cut shares of his or her company, but only one, very obvious reason why they would buy. Various empirical studies have demonstrated the useful potential of this method if you know where to look (learn more here).
Keeping this in mind, let's take a gander at the recent action surrounding Lions Gate Entertainment Corp. (USA) (NYSE:LGF).
At the end of the fourth quarter, a total of 15 of the hedge funds we track were long in this stock, a change of -17% from the previous quarter. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings substantially.
When looking at the hedgies we track, Alydar Capital, managed by John Murphy, holds the most valuable position in Lions Gate Entertainment Corp. (USA) (NYSE:LGF). Alydar Capital has a $63 million position in the stock, comprising 4.9% of its 13F portfolio. Sitting at the No. 2 spot is Tremblant Capital, managed by Brett Barakett, which held a $24 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Other peers that are bullish include Stuart Peterson's Artis Capital Management, Phill Gross and Robert Atchinson's Adage Capital Management and Malcolm Fairbairn's Ascend Capital.
Due to the fact that Lions Gate Entertainment Corp. (USA) (NYSE:LGF) has witnessed a declination in interest from the smart money, logic holds that there is a sect of money managers that elected to cut their entire stakes heading into 2013. At the top of the heap, Mark Rachesky's MHR Fund Management sold off the largest stake of the 450+ funds we monitor, worth about $783 million in stock.. Christopher Lord's fund, Criterion Capital, also said goodbye to its stock, about $8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 3 funds heading into 2013.
Insider trading activity, especially when it's bullish, is most useful when the company in question has seen transactions within the past half-year. Over the last half-year time frame, Lions Gate Entertainment Corp. (USA) (NYSE:LGF) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the returns exhibited by the aforementioned studies, everyday investors should always keep an eye on hedge fund and insider trading activity, and Lions Gate Entertainment Corp. (USA) (NYSE:LGF) shareholders fit into this picture quite nicely.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.